General Dynamics NASSCO, the last major shipbuilder on the West Coast, might be poised for growth following a downturn that forced the company to lay off 560 employees and subcontractors this summer.

The sprawling shipyard south of the Coronado Bridge in San Diego is likely to get contracts to build three large Navy support ships. It’s also competing for multibillion-dollar contracts to design and build Coast Guard cutters. And NASSCO says commercial operators are thinking about buying new ships now that the recession has eased and the cargo shipping business has picked up.

NASSCO needs the work. The company was scheduled to launch the dry cargo ship USNS Washington Chambers on Saturday. That leaves NASSCO with only three Lewis-and-Clark class ships to build. And the company doesn’t have any major new commercial contracts. The yard is finishing the product carrier Evergreen State, which will be delivered in December.

Q: The Navy wants to increase the size of its fleet from 284 to 313 ships. But congressional studies say there might not be enough money to meet that goal. Do you worry that the money issue will hurt the shipbuilding and repair business?

A: There is worry. But Adm. Gary Roughead (Chief of Naval Operations) has confirmed the need for 313 ships. And it is in the Quadrennial Defense Review of 2010. There seems to be agreement among Congress, Navy and Marines that 313 is the right number. But there are many programs, like education, competing for funding. What the shipbuilding industry should be doing is reducing costs at every turn to make itself more affordable so that the government can afford to build the ships.

Q: What has NASSCO been doing to reduce costs?

A: We have what is probably one of the most extensive cost-reduction programs in the shipbuilding industry. We have already gotten 6,000 ideas from our workers this year and incorporated about 4,000 of them. The ideas come from everyone from an engineer who has a way to change the design of a ship to a craftsman who says something like, “You know, if we just change the process we’re following we could save 10 man hours of labor.” This is not a management program. It is a shipyard program that has saved us more than $1 million this year.

Q: NASSCO had layoffs this summer that reduced its work force to about 3,700. I’ve heard that there might be a small number of additional layoffs. Will your work force continue to decline over the next couple of years, or will it stabilize?

A: That’s always very difficult to predict, especially in shipbuilding. We could see some small layoffs until next summer. One or two layoffs here or there may become necessary. But we have no plans for any significant layoffs.

It will very much depend on what happens with the U.S. government and with the commercial side of our business.

There was a downturn on the commercial side as we went through 2007-2009. Shipbuilding feels a recession later than most industries, and it comes back a little later, due to the length of time it takes to design and build ships. We had work on the books that kept us healthy until this summer.